Out talking to the public yesterday in both Liverpool and Southport, I was told by a number of people who instead of taking the Merseyrail train journeys they would normally, they were instead taking buses. One member of the public in Liverpool told me that she supported the strike action as she did not want to see the removal of the guards from the trains. Below is a video produced by the RMT union to explain the reasons why they want to keep a guard on the train.

The Merseyrail strike is connected to a political decision made by councillors on the Merseytravel Committee (Liverpool City Region Combined Authority) in a private meeting and Mayor Joe Anderson and councillors on the Liverpool City Region Combined Authority also in a private meeting both in December 2016 to order new trains to replace the existing train fleet on the Merseyrail network. There was lobbying before this decision was made on this issue against this course of action by the RMT union.

At present the Merseyrail trains are crewed by two people (a driver and guard), whereas the plan for the new trains was to make them crewed only by a driver.

Before the contract was awarded to Stadler Bussnang AG to build the new trains, the second placed contractor Bombardier Transportation Limited sued Merseytravel alleging irregularities in the procurement process. The Particulars of Claim in that matter were published on this blog last year. As a result of the lawsuit, signing the contract for new trains with Stadler Bussnang AG happened later than expected in 2017.

Although the legal case is between Bombardier Transportation UK Limited and Merseytravel in the Technology and Construction Court (part of the High Courts of Justice), the winning contractor (Stadler Bussnang AG represented by Norton Rose Fulbright LLP) was recently ordered to pay £35,000 of Bombardier’s legal costs (£37,710 was requested) due to behaviour described by The Honorable Mr Justice Coulson as “unreasonable”.

Under the terms of the franchise agreement between Merseytravel and Merseyrail (clause 5.4), payments are made from Merseytravel under a Force Majeure clause to replace any lost profits as a result of strike action.

This leaves little financial incentive on Merseyrail to resolve the industrial dispute with RMT.

I have emailed the following question that hopefully I will ask at Friday afternoon’s public meeting (9th March 2018) of the Liverpool City Region Combined Authority:

Well, it’s estimated that Merseytravel make payment of at least £139,000 each day of the strike, plus payments for the contingency arrangements (which is partly why Merseyrail.

For the last financial year available (2016) Merseyrail made a profit of £15.829 million, paid £3.302 million tax, leaving a profit after tax of £12.527 million.

Of this, £12.318 million was paid in dividends to its shareholders (£6,158,774 for each share held).

The dividends were paid to Merseyrail Services Holding Company Limited.

As they (Merseyrail Services Holding Company Limited) put in their accounts about the strike action back in September 2017 (relating to the 2016-17 financial year):

“Events since the balance sheet date

On 28 February Merseyrail received confirmation from RMT that the guards had voted in favour of industrial action in relation to the new fleet. The initial strike went ahead on 13th March, and a subsequent strike has been called for 8th April. Whilst the strike disrupted the service, contingency planning was in place. The financial impact of this action is expected to be minimal.”